Tying the Knot: A Drama

The Paramount and the State Theatres Walk Down the Aisle

Dan Fallon, CEO of the Austin Theatre Alliance
Dan Fallon, CEO of the Austin Theatre Alliance (Photo By Kenny Braun)

Forget merger. Think wedding. Yes, the union of the Paramount Theatre for the Performing Arts and the State Theater Company is a business affair, replete with all the balance sheets and boardroom agendas and dbas of your standard Wall Street merger, but that's so cold, so faceless, so Eighties. These are theatres getting together, and when we think about theatres, we don't think about quarterly earnings and portfolio diversification; we think about plays and concerts, experiences that delight us, move us, feed our souls. Besides, theatres traffic in stories, dramas with characters and conflict and emotion and suspense that suck us in and engage us, that talk to us about life and sometimes become a part of our lives. So to give this historic event its due, it deserves to be looked at as a story, the story of a wedding between two neighbors. In some ways, this union looks like the most natural pairing in the world. The two tying the knot have lived side-by-side for decades; they've both known flush times and hard times, endured booms and busts and more booms; they're well-known and well-thought-of in the community; they're even in the same business. Why shouldn't they make a happy marriage? But that's the thing about marriages: The partners are individuals, and no matter how similar they may appear, they always come with different histories, different goals, different needs. So that sometimes even the most sensible match can lead to discord and separation. Is that likely to happen here? That, as a man in our neighbors' line of work once said, is the question. So the story begins ...

Dramatis Personae: The Groom

Our groom is a stately older gentleman, a pillar of the community since the days of World War I. He debuted on the Avenue in 1915 under the name Majestic. Designed by prolific theatre architect John Eberson, the Classical-Revival 1,300-seater was built by Ernest Nalle to host theatrical productions and vaudeville in high style. Some 15 years later, however, the popularity of movies -- especially those newfangled talking pictures -- led the Interstate Theater Circuit chain to acquire the theatre and make it over into a classy cinema. Along with the wall-to-wall carpeting, upholstered seats, state-of-the-art sound system, three-story vertical marquee, and some Baroque-Revival architectural flourishes, the theatre acquired a new name: the Paramount. Live performances were still part of the theatre's bill-of-fare -- Helen Hayes played Mary of Scotland there, and Katharine Hepburn appeared in the national tour of The Philadelphia Story -- but movies dominated the menu and by the 1950s, were almost all the theatre presented.

The Paramount retained its luster for many years following World War II, but once television took hold of American culture and moviegoing underwent a decline, the Paramount suffered the fate of so many of the nation's downtown cinemas: a shift to less prestigious Hollywood product and a facility that fell into disrepair. Its fortunes had fallen so far by 1973 that the theatre was set to be torn down. Fortunately, a trio of inspired young men believed they could rescue the sad old building and rehabilitate it. John Bernardoni, Charles Eckerman, and Steven Scott formed a corporation, acquired the lease, and in 1975, reopened the theatre doors, hosting concerts, presenting live theatre, and showing vintage movies (at 50 cents a pop). They got the theatre accorded historic landmark status and spearheaded a two-year, $2.5 million restoration of the theatre, completing the Paramount's revitalization just in time for its 65th birthday.

The theatre started a new life in 1980 as a presenting house for touring acts, but Bernardoni wanted the Paramount to produce its own shows, too, and a flirtation with that nearly killed the theatre just a few years after its revival. In 1984, a homegrown production of Dracula starring Martin Landau was mounted for a local run and subsequent tour around Texas. The show did respectable business locally, but in the course of its statewide travels, it lost nearly $400,000. The debt hit the Paramount at an extremely awkward time, just as the Austin boom of the early Eighties was going bust. There were no deep-pocketed patrons available to bail the theatre out, and it limped along for the next three years, with the situation growing increasingly grimmer. By February of 1988, things were so dire that then-newly installed general manager Paul Beutel called a press conference to warn Austinites that if the Paramount didn't raise $650,000 in six weeks, the theatre would close its doors. Even though the city was still in the depths of the bust, it responded to the call and the theatre survived.

The last dozen years have seen the Paramount not only creep back from fiscal oblivion but fully rebound. The mix of Beutel's careful stewardship and savvy booking with Austin's economic prosperity in the Nineties gave the theatre yet another new lease on life. The theatre's associations with producer Charles Duggan and the ever-popular Tuna plays, and with the phenomenally successful Austin Musical Theatre, provided live, original programming that helped turn things around, while the revival of the theatre's Summer Movie Classics series found a whole new era of Austinites eager to relish the pleasures of moviegoing in a grand palace of the old style. In time, the theatre was doing so well that it was interested in expanding. But the location of the theatre -- such a help in so many other ways -- proved a hindrance when it came to physical growth. Where could the Paramount go to grow? Hey, how about that fetching miss next door?

Dramatis Personae: Here Comes the Bride

That fetching miss is the State Theater, a child of the Depression that underwent its own remarkable resuscitation in recent years. Born in 1935, this Deco-inspired movie palace was, like its neighbor, a theatre that began life in style and watched its fortunes fade as the years passed and TV and the suburbs kept customers in their homes and far from downtown. Still, the State managed to hold on 'til the early Eighties, when it had its last gasp as a cinema, showing second-run movies for a dollar. Then its doors were closed.

In the mid-Eighties, the State briefly returned to life as a theatre for live performance. Local theatrical visionary Doug Dyer, fresh from Esther's Follies, believed he could do for this dilapidated moviehouse what Bernardoni, Scott, and Eckerman had done for the Paramount, transforming it into a showplace for the performing arts. But Dyer's reach exceeded his grasp and after a few months, the theatre was dark again and remained that way for another eight years.

It was in 1994 that the State found its true savior, someone who could bring it back to life and keep it going. That someone was Don Toner, producing artistic director of Live Oak Productions, a local theatre company which was in the market for a new theatrical home at the time. See, Live Oak's original home at 300 Nueces was on a piece of property that had been acquired by the state of Texas, and the state was less interested in having a theatre on the land than it was in having a parking garage. Live Oak got the heave-ho and was desperately seeking new digs. Toner had already had his eye on the State before his group's eviction -- the theatre's location on the Avenue gave it automatic Austin prestige, and its proximity to the beloved Paramount added to its allure -- and the need for a facility only gave him more incentive to pursue it. Now, he was well-aware that the building was hardly in shape for presenting theatre, especially the professional, resident-theatre quality to which Live Oak aspired. But that didn't deter Toner, who is nothing if not a builder at heart. To him, the State was a good fixer-upper, and he was determined to get it and whip it into shape.

And get it he did, although acquiring the State was considerably more complicated than your typical real estate transaction. You see, there was this little matter of a 1985 bond proposal setting aside $2 million for the renovation of the State into a performing arts facility. The proposal, which was approved by voters as part of a package involving new facilities for the Laguna Gloria Art Museum (now the Austin Museum of Art) and the Zachary Scott Theatre Center, was originally designed for the Paramount, as a means for it to get hold of the State and expand into it. But the bust and the fallout from the Dracula tour made it impossible for the Paramount to act on that plan, and the bond money sat around for several years with no one to claim it. In 1991, City Council tried to remedy the situation by linking use of the bonds to city ownership of the theatre, but further movement was stymied the next year when voters rejected a proposal for the city to acquire the facility. All this meant that for Live Oak to get the State, it had to jump through the city's hoops, satisfying its requirements for an operator of a city facility, even though the State really wasn't one, especially once Live Oak went ahead and purchased the theatre itself in 1996 -- as previously noted, it was complicated. Eventually, however, the deal went through.

And eventually, the State also got the bond money (although that required a little additional lobbying of City Council and a straight-off-the-stage showdown between Live Oak and its critics in council chambers). Toner and company had made some changes to the facility themselves upon moving into the State in 1995, a valiant job that had at least enabled them to stage two years' worth of productions in their new home. But the bond money would allow them to do the job right: refurbish the façade, rewire the building, upgrade the plumbing, install central air and heat, replace the seating, and transform the adjacent Reynolds-Penland Building, which the company also purchased, into an annex for the State with dressing rooms and rehearsal and shop space. Architect Sinclair Black was engaged to draw up the plans, and, over the course of a year and a half, the State got its makeover.

Of course, as happens with home-improvement projects, the money didn't go as far as it was hoped. Even with a couple of million at its disposal, Live Oak was not able to take the renovation as far as it originally envisioned, and when the company presented its first production in the renovated space -- under its new name, the State Theater Company -- much was left undone: improvements to the dressing rooms and shops, rehearsal space, a planned bar and cabaret space in the building basement. And the acoustics in the auditorium were still a problem. Still, the theatre had taken a dramatic step forward, with a profoundly enhanced auditorium, greatly upgraded technical facilities, and classrooms designed to facilitate performance.

The State itself was rejuvenated, just as the Paramount had been two decades earlier, but that wasn't the only parallel that applied. In a less pleasant echo of her neighbor's history, the State Theater Company was also facing money problems, a stubborn deficit that wouldn't go away. As the shortfall hovered in the neighborhood of $120,000, the board of the State Theater Company began to look for alternative sources of revenue. Where could they find a steady money stream to help stabilize operations at the State? Hey, how about that sugar daddy next door?

Meant to Be

Thus the wheels of the current union were set in motion. The two theatres were both on growth curves and wanted to continue to capitalize on the success they were enjoying, but both also found themselves with limited resources with which to expand. As it happened, both theatres were moving forward with dramatic changes to their administrative setups -- the Paramount was replacing its longtime top staff position, general manager, with two posts, a chief executive officer and an artistic director, and the State was splitting its producing artistic director job into managing director and artistic director positions -- when the boards got wind of each other's plans, and the concept of a merger was broached. Paramount board chair Bill Willis and State board chair Hilary Young instigated a series of exploratory discussions on the issue, and the more it was discussed, the more sense it seemed to make to both sides.

Looking back at the histories of the State and the Paramount, one can see connections between the two theatres that almost suggest their fates were intertwined, that this union was meant to be. For decades, the pair was linked via the Interstate Theater Circuit, which booked the movies shown in both houses. Then there was that 1985 arts bond proposal which would have allowed the Paramount to hook up with the State.

Tying the Knot: A Drama
By Robert Faires

Boards of directors, however -- even the boards of theatres -- rarely base monumental policy directives for their organizations on their sense of destiny. They're just practical that way. They want to know that whatever step they take is in their organizations' best interests, so they rely on statistics, financial reports, management expertise to make a call. By those standards, the boards of the Paramount and the State Theater Company lined up the same way the disciples of destiny would have: They voted for the two theatres to join forces. On March 23, in separate meetings, the two boards approved a proposal to merge and form a new organization. In the parlance of our story, that would be the night that the Paramount and the State got engaged.

Goin' to the Chapel

So it's serious, this relationship. It's been formalized. Now comes a crucial time, the period before the wedding, when every aspect of the relationship -- as it has been and as it will be -- comes under scrutiny. What does each partner gain and each one give up? Who is responsible for what in this new consolidated lifestyle? The respective partners -- as personified here by the theatre boards and staffs and, to a lesser extent, its affiliated artists and patrons and audiences -- will have to answer some of those questions, but in the preparation for most weddings, there are individuals whose job it is to help guide the process of answering these questions. On the spiritual plane, this might be a member of the clergy; on the earthly plane, it's often a wedding planner. However different their functions, they serve a like purpose: to provide a focus on the impending nuptials that will ensure that the partners are joined properly.

Once the boards of the Paramount and the State approved their merger, they needed an administrator to lead the new joint organization. Following the Paramount's earlier concept, they created a top staff post of chief executive officer and hired Dan Fallon, whose credentials include stints managing Pittsburgh Public Theater, Milwaukee Repertory Theater, and the Ford Center for the Performing Arts in New York City, to fill that post. Now, one might not ordinarily equate a CEO with either a priest or a wedding planner, and once you've met Fallon, a genial fellow with a head for business and a heart that's lost to the theatre, he doesn't really strike you as the guy a director would cast in either of those roles. Still, in his new job, Fallon will be guiding the process by which the Paramount and the State will be joined as one. He will preside over this bonding and see to it that all aspects of the relationship are scrutinized and all those pesky questions answered, questions such as:

Can Two Live as Cheaply as One?

Somewhere in the history of matrimony, someone came up with the laughable suggestion that just because two people join their lives as one, they ought to be able to live on the budget for one. If this was ever the case -- and that's highly unlikely -- it ain't the case now. Modern couples may be willing and able to combine some of their resources -- say, a place to live or a vehicle to get around in -- but for the most part the demands on their lives -- the economy, their jobs, where they live -- dictate that they continue to spend double the money for their wardobes, for food, for transportation, etc.

Will that be any different for a marriage of two theatres? Don't bet on it. While it's true that ideas for combining the Paramount and State staffs to eliminate duplicated services has been lighting up the eyes of both boards in the Paramount-State union since the earliest talks, the merger can only take this so far. Sure, it's possible to merge the separate staff health plans and workers' comp plans, to fuse two marketing departments into one that will promote work on both stages, to create one development department to raise funds for both theatres, to streamline the ticket sales setup to handle both theatres in a single box office, to allow a single custodial crew to maintain both facilities, but the merged organization will still have those two facilities which will have to be maintained, and that's still double the money. And it will still have to fund performances in both theatres, which is also double the money. And since both theatres will still retain their individual artistic missions -- one primarily presenting, one primarily producing -- certain staff positions will not be able to be combined. The State Theater Company will still need an artistic director to develop its season and mount its productions, and the Paramount will still need a director of programming to find and book the work the theatre will present. There's no way that these two theatres could ever live off the budget of one unless they were to drastically reduce the services they provide.

And cutting back runs counter to the goals of both theatres at this point in time. Remember, both the Paramount and the State are in expansion mode; they're itching to exploit their recent successes, to do more, not less. The money they save by combining certain resources will be plowed into areas that will nurture the growth of the theatres, say, larger production budgets for the State's mainstage shows or funding for productions in the Horton Foote Theatre, a 90-seat black box space under construction on the Eighth Street side of the Reynolds-Penland building. If further confirmation of this expansionist mindset were needed, last week CEO Fallon offered up that he is in the process of developing a budget for the joint organization, and he thinks that it will "probably surpass a $6 million budget," a bump upward of several hundred thousand dollars from the theatres' 1999-2000 seasons if you add their budgets together.

Who Wears the Pants in This Family?

Send two people down the aisle and somebody's going to ask, Who's the boss in this household? Which partner is really calling the shots? It never fails. Some people simply can't accept the idea of a marriage of equals; they assume that one partner has to be the dominant. It's happened with the marriage of the Paramount and the State, too. A common rumor circling around the theatre community is that this merger is being driven by the Paramount board so that it can eventually absorb the State and turn it into a secondary presenting house. Looking at the events of the last six months from a certain angle, you can construct a nice little conspiracy theory to support it. The Paramount is the larger of the two organizations, with a budget roughly double that of the State. It's also the more financially secure of the two organizations, one that actually has a cash reserve (rather a rarity among modern theatres), as opposed to the deficit-hobbled State. And although Fallon has always been referred to as the CEO of the merged organizations, in fact he was hired as the CEO of the Paramount, and until all the legal wrinkles of the merger are ironed out and the merged entity incorporated, he technically has no authority over the State or its staff. Proof that the Paramount is scheming to take over its smaller, younger, more vulnerable neighbor.

Like many conspiracy theories, this one works only if one overlooks a couple of key facts. One, the State Theater Company owns its building and the adjacent Reynolds-Penland building, and that property doesn't automatically convey to the Paramount or the merged entity when the merger goes through; if the Paramount truly wants to expand beyond its doorstep, it needs the State. Two, the State board just completed a nine months-long national search for a new producing artistic director; the Paramount board would have hardly sat by and tolerated such an expenditure of time, energy, and money if its ultimate goal was to kill off the producing arm of the new organization. Well, unless the board was being run by Dr. Evil, but it isn't.

As Fallon says, "It really is, in the truest sense of the word, a merger. The fact that as much care and energy has gone into finding the right artistic director for the State illustrates that. All of the energy and resources put into that effort really proves that although the State is the smaller of the two entities, the work of producing theatre that the State does is every bit as important to the organization as the presenting work that the Paramount does. That autonomy of mission will remain forever, and, we hope, expand. And because of the real estate and the only opportunity for physical expansion that the Paramount would have, the State brings a lot to the table."

What's in a Name?

Custom once dictated that in a new marriage the bride automatically assumed the surname of the groom. This isn't necessarily the case today, but the tradition's long standing ensures that even the most modern couples must confront the issue of identity in their new relationship. Should she take her partner's name, for convenience's sake, or does that send the signal that she's subordinating her identity to her partner's? Should they take each other's surnames, uniting as one in name as well as in spirit, or will that prove unwieldy and just confuse everyone? Why can't he take his partner's name? It's a vexing situation, because our names have so much to do with who we are, not just to us but to everyone who meets and comes to know us.

The problem is no less vexing when it's theatres getting hitched. Neither company wants a name that suggests it is being absorbed by its new partner. (Can you imagine the Paramount Center for the Performing Arts or the State Theater Complex?) Nor do the partners want a name that's a hyphenated combo of both names or a hybrid of the two (a sentiment that a lot of merge-happy multinational corporations could benefit from; sure, it was funny, but would you really want to call it the ParaState forever?). And if they adopt a new name, what will that do to their audiences, who are accustomed to coming to see a State Theater Company production or a Paramount presentation?

In wrestling with this issue, the boards of the theatres have effectively found a way to have the best of both worlds: The individual theatres will retain their historic names, while the new joint organization will sport its own moniker: the Austin Theatre Alliance. That way, the theatres retain their links to history, audiences can still identify the partners' work with their respective facilities, and the merged organization can still have a new name that reflects its new status. Now, not all the kinks have been worked out of this plan. As Fallon says, "The question remains whether a production will be an Austin Theatre Alliance at the Paramount, or the Paramount presents such-and-such, a member of the Austin Theatre Alliance?" But just as the lawyers will eventually sort out whether the Austin Theatre Alliance will be a parent company to the State and the Paramount, which continue on as legal entities, or be a company to which both theatres belong, the board will eventually decide which name goes where on the theatre program cover.

Speak Now or Forever Hold Your Peace

Every marriage has its critics, and they have their chance to sound off at the ceremony. With this marriage, however, it doesn't seem as if the exchange of vows will be interrupted by someone with a reason why this couple should not be joined. Despite the fact that this kind of merger is relatively unknown in the theatre world and a number of questions remain as to how the two theatres are going to bring it off, Dan Fallon says that the response to the merger has been overwhelmingly positive. "People who have come forward have all offered the greatest support and excitement," says Fallon, "and that is from the casual patron to the ardent supporter to the staff to the board member to the corporate contributor to the person who doesn't live in Austin who hears about this project."

Fallon will allow that this hasn't always been the case. For example, the members of the State's acting company -- a loosely defined corps of performers who have appeared in the theatre's productions -- have raised questions about the merger. He notes that "when I first came here and I was meeting with members of the acting company, one of the first questions out of their mouths was, 'Is the Paramount just going to start presenting at the State now?' So there were these fears and concerns because the whole story hadn't been fully explained to them. We have undertaken the task of trying to do that. Now, I believe they are firmly convinced." Once the merger is explained to people, Fallon says, and they know "exactly what is going on, it makes sense to them. Anybody who has a true sense and a true idea of what it is that is going on is 100% supportive of this."

Season subscriptions may not be a reliable indicator of support for the merger, but note this: Paramount season subscriptions are up significantly -- they've surpassed the theatre's projections by 200 and could top the 7,000 mark. Clearly folks aren't running away.

... Let No Man Put Asunder

It's hard to believe in this era of high divorce rates that no one on either side of this theatrical union is considering the possibility of the marriage's failure. But according to Dan Fallon, that's pretty much the case; at present all the legal energy being expended on this arrangement is directed toward making the merger work. "There certainly is no allowance for community property," Fallon jokes. "At this point, that which is owned by the State will stay the property of the State, and that which is owned by the Paramount will stay the property of the Paramount. In time, as we see this [merger] is really doing everything we want it to, and it becomes more prudent to make them one, we probably will do that."

This is one area in which Fallon sees his lack of history with either organization as a strength. "I bring a unique perspective to this whole project in that I've never known anything else," he says. "From the day I set foot in this town, I was the CEO of this huge chunk of theatre real estate that was the Paramount, the State, and this funky little music store. So I think it's very helpful to both boards that I have this perspective and that's the way I think."

The Married Life

Technically, the State and the Paramount are still in the pre-nup stage. Attorneys and board members are continuing to hash out the legal details of joining the two theatres, a process they believe will be wound up by the end of September. When that happens, contracts will be drawn up, approved by the boards, and signed, and no doubt the champagne will flow.

But despite the fact that the wedding day is still a month away, the Paramount and the State are, like a number of engaged couples who share living quarters before their nuptials, already living the married life. Dan Fallon is effectively running both theatres, drawing up budgets, negotiating contracts with the unions, hiring staff, such as the new development and marketing directors, and preparing for the arrival of the State's new producing artistic director, Scott Kanoff, currently the literary manager and resident director for the Cleveland Playhouse. Kanoff, who won't join the staff full time until January, long after the merger is finalized, is already making trips to Austin to familiarize himself with the theatres and the community. A local computer company is working to network the entire organization through both theatres. Both theatres have set their seasons for 2000-01 and are marketing them to subscribers. The State is proceeding with its renovation, finishing out improvements on the dressing rooms and some of the backstage space, and completing demolition on the space which will eventually be the Horton Foote Theatre. The decision to remove a structural pillar in the space will push back the opening of the theatre and require another $300,000 or so to complete, but Fallon and his team are already seeking out funders for that, as they are seeking out benefactors for their Founders Circle, a corps of patrons who can help fund the first two years of the merger. ("We're going to need that additional support in the beginning," says Fallon.) For all practical purposes, the happy couple has pulled away from the church.

If you've been unable to tell much difference between the Paramount and State theatres of today and those from before the merger was approved, well, that's not surprising. Most newlyweds don't make dramatic changes overnight. Once the thrilling chaos of the wedding subsides, the bride and groom will appear to be basically the same people they were before the big day. To a certain extent, this applies to the State and the Para -- um, the Austin Theatre Alliance, too. The Paramount will continue to present the Greater Tuna shows and Austin Musical Theatre productions, and the Summer Movie Classics series, and the like right theatre at 713 Congress. The State will continue to mount its own productions at 719 Congress. Some changes, such as the administration of the alliance, may never be apparent.

But over time, as in the marriages of people, both theatres will grow. The State will eventually complete the Horton Foote Theatre, and a production which begins there may be able to be moved to the State's 350-seat theatre and if it is sufficiently successful, perhaps to the Paramount's 1,300-seat house, as Dan Fallon describes it, "every Broadway producer's dream." In time, the Paramount may present work in other venues, such as the Long Center that is being built out of Palmer Auditorium. With the arrival of Scott Kanoff, the character of the State's productions will likely change, and they may include co-productions with companies that have previously not performed at the State. There will come a day when you will be able to see the changes this new relationship has worked on these theatres. It's a day that will mean a lot to Dan Fallon. "The day I'm looking forward to," he says, is the day that the Austin Theatre Alliance is known as an institution of quality, "whether it's the actual production of a show, whether it's the operation of the box office, whether it's a group that we have mentored. I'm looking forward to the day when the institution that we have is recognized, respected, and known outside the State and the Paramount." end story

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